By James F. Cotter

In September 2008, American International Group--AIG--received $85 billion in the largest bailout of a private company in the nation's history.  The next week, AIG executives indulged themselves to the tune of $444,000 at a retreat in California that featured spas, golfing, and banquets.  Subsequently, the insurance giant received another $37.8 billion from the Federal Reserve.  (1)

On October 17, the Associated Press reported that AIG executives had spent $86,000 on a hunting trip in England.  On November 10, ABC News reported that the company had spent another $343,000 on a trip to a resort in Phoenix.  This report came shortly before another government bailout was negotiated ($40 billion this time).  (1) 

Federal Reserve Chairman Ben Bernanke, testifying before the Senate Banking Committee in early March, said, "AIG exploited a huge gap in the regulatory system," and "made irresponsible bets and took huge losses."  (2)  In addition to all this, AIG recently announced that it was paying $165 million in bonuses to retain top performers in the Financial Products unit.  The same top performers who ran the company  into the ground.  There were 73 recipients of this largesse, 11 of whom no longer work at AIG.  Evidently AIG is using the word "retention" in some hip new way that most dictionaries have yet to catch up with.

The Financial Products unit, incidentally, is the division that sold credit default swaps.  Says insurance consultant  Andrew Barile, "They were selling an insurance- type product that isn't called insurance so it wasn't regulated like insurance.  By calling it a credit default swap, you have invented a new product, but it's no different than insurance."  (3)

Senator Chuck Schumer of New York refers to such antics as "Alice in Wonderland business practices," and concludes:  "It boggles the mind."  (4)

AIG has received four government bailouts so far, totaling $182 billion.  (5)

As CNNMoney  editor  Paul R. LaMonica says, "Paying out $165 million in bonuses to people at a company that lost nearly $100 billion last year is, to quote Woody Allen, ‘a travesty of a mockery of a sham of a mockery of a travesty of two mockeries of a sham.'"  (6)   

But AIG is not the only villain in this disastrous drama.  Other companies deserve their fair share of revulsion.  Citigroup, for one,  also plans to pay millions of dollars in bonuses, at least some of them unearned.  The company's Institutional Client Group lost $20 billion last year.  James Forese, who co-heads that unit, is slated to receive $5 million over the next five years.  At least fifteen other Citigroup executives are also scheduled to receive millions of dollars.  Citigroup has refused to say how much it is planning to pay in all.  (7)   

As the president said, "The American people will find it hard, as I do, to accept a situation in which a tiny handful of ... executives, whose pursuit of private power and profit exceeds their sense of public responsibility, can show such utter contempt " for the national  interest.  (8)

No,  not President Obama.  That was President Kennedy in April 1962, following the across-the-board price hikes by the steel companies. 

How little things change.

REFERENCES

• 1. http://en.wikipedia.org/wiki/American_International_Group
• 2.http://www.washingtonpost.com/wpdyn/content/article/2009/03/03/AR2009030303810.html?hpid=topnews
• 3.http://cnnmoney.mobi/money/latest_news/latest_news/detail/133037/2
• 4.http://www.reuters.com/article/wtUSInvestingNews/idUKTRE52G4ZJ20090317?virtualBrandChannel=10112
• 5.http://news.yahoo.com/s/ap/20090320/ap_on_bi_ge/citigroup_bonuses_1
• 6. http://money.cnn.com/2009/03/17/markets/thebuzz/
• 7. http://www.time.com/time/business/article/0,8599,1886778,00.html
• 8. http://www.trivia-library.com/a/united-states-and-american-history-early-1962.htm

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